I am a securities law attorney at Wiand Guerra King in Tampa, Florida, where my practice includes complex commercial litigation and regulatory matters, with a focus on securities and financial services litigation. I am also part of the team representing the court-appointed receiver of Arthur Nadel's $400 million Ponzi scheme, and have particular expertise in the area of Ponzi schemes. In addition to my law degree, I also hold a Masters in Business Administration from the University of Miami. In my spare time, I also publish the Ponzitracker blog, which tracks the proliferation of Ponzi schemes both nationally and internationally. Feel free to follow on Twitter at @Ponzitracker. All opinions expressed are solely that of the Author. This blog is not intended, nor should it be construed, as legal advice.

Zeek Receiver Addresses Media; Up To Two Million Victims, 'Herculean' Effort Ahead

Ken Bell, the court-appointed receiver for Zeek Rewards, participated in a conference call today with various members of the media in an effort to provide an update since Zeek’s unraveling ten days ago. In a conversation that included prepared remarks and a question-and-answer session, Mr. Bell addressed the status of his investigation, as well as a look into his priorities for the near future.

(Photo credit: Wikipedia)

Mr. Bell started the conference by opining that the number of potential victims was likely more than previously expected, and estimated that there could be nearly 2 million affected. Since his appointment, Mr. Bell has received 1000′s of investor phone calls and emails, many providing heart-breaking stories about their current situation. He also disclosed that the $600 million thought to be lost is also likely to be revised upwards as the investigation continues. The number of victims likely made the scheme “one of the largest schemes to go into receivership,” according to Mr. Bell. “Terabytes” of financial information were also recovered from Zeek’s offices, which must be analyzed in order to determine investor losses.

Mr. Bell also addressed the issues faced by many who had been in the process of investing with Zeek by way of cashiers’ checks when the scheme unraveled. Citing the court’s order to recover all assets, Mr. Bell indicated that all cashiers checks in his possession would be considered assets of ZeekRewards and would be deposited and added to the pool of funds currently being amassed for victims.

As to Paul Burks, Mr. Bell indicated that he had met with Burks when the scheme was first uncovered, and had since been in contact with Burks’ attorney. Regarding the “source” of the $4 million fine paid by Burks to the SEC, Mr. Bell was not sure, but indicated that he intended to recover any “proceeds” from the scheme in Burks’ possession.

In moving forward, Mr. Bell stressed that his job was to locate and lock down all assets both in Zeek’s possession and from “anyone who ought not to have it”. When asked if he was alluding to the possibility of “clawback” litigation against investors who withdrew more than their initial investment, Mr. Bell stuck to his message that he would pursue “every dollar” from those in wrongful possession of the funds. More details will likely emerge in Mr. Bell’s report to the court following his initial investigation.

Mr. Bell was also asked to address the recent news that some investors had filed class-action lawsuits against Zeek and Burks. While Mr. Bell indicated that he had not been provided with copies of the lawsuits, he did give his opinion that, under the order appointing him as receiver, any and all litigation brought against Zeek or its subsidiaries would be stayed and prevented from moving forward. Ultimately, he said, the court would have to provide guidance.

In the near future, Mr. Bell hoped to be able to communicate with investors through updates to the website, and urged victims to monitor the site, which is located at www.zeekrewardsreceivership.com. Saying that it was “too early to think about a distribution process,” Bell encouraged investors to review their records showing proof of any deposits or withdrawals, and that an official proof of claim form would eventually be posted to the website.

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The fight for Zeek is not looking good as the SEC stands behind their decision to shut Zeek down. Look like all other lawsuits will by stopped or delayed by the current SEC action. Be careful who you listen to about the details. Go to www.ZeekBates.com for ‘inside’ info on what is going on and what the Zeek leaders are doing about it!

****BREAKING NEWS****Don’t you find it interesting that from the UNCASHED CHECKS that the SEC had decided to POOL those uncashed check and cash them now instead of returning it to the person this is so wrong and there is a bad agenda going on from the SEC.

The SEC is following the law. Once you purchase a cashier’s check, you have surrendered the funds. Your ownership ended when you handed over the cash. That check, from the moment it was issued, was the property of the payee, which is the point of a cashiers check to begin with.

You can make a case that the bank has every right to protect their customers from fraud. My advice is to cash the cashiers checks and let your bank fight it out with Bell. He has given up all the moral ground.

How will all those top affiliates deal with the Clawback? How will the Govt determine if they actual knew that the money could have been part of a “Ponzi” scheme? I guess that I was lucky(?) that I only lost money and did not take any profits!! How is the ‘innocent’ public supposed to know if a business is real or not as the Govt did not comment on Zeek before it shut it down. This is history in the making. We will all see how it unfolds and hopefully we will be a little wiser! www.ZeekBates.com is saying on top of the case!